>The incentive to build new rental housing will evaporate
Or the incentive to build cheap apartments that can be profitable with the caps will increase. If you know you can easily get X amount per apartment, and can build and manage a building under that total amount, why wouldn't you? This is often a recurring theme that I see that people seem to do. Since something can't be as profitable as before, no one will ever try to make a profit now. I don't get it. There will be developers who will figure the numbers out and make good money. Of course the numbers may be too strict and my scenario isn't a possibility, but I would bet you haven't ran the numbers yet to know it's not.
Or the incentive to build cheap apartments that can be profitable with the caps will increase. If you know you can easily get X amount per apartment, and can build and manage a building under that total amount, why wouldn't you? This is often a recurring theme that I see that people seem to do. Since something can't be as profitable as before, no one will ever try to make a profit now. I don't get it. There will be developers who will figure the numbers out and make good money. Of course the numbers may be too strict and my scenario isn't a possibility, but I would bet you haven't ran the numbers yet to know it's not.